ECON202 - Lecture 8

ECON202 - Lecture 8 - (2) Used goods (3) Imports (4) Rent...

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ECON202 Class Notes April 17, 2008 Lecture 8 1) Measuring the Price Level and inflation a) Price level i) Average level of prices in the economy b) Index i) Series of numbers used to track a variable’s rise or fall over time ii) value of measure in current periodvalue of measure in base × period 100 iii) PPI (1) Producer price index (a) Whole sale iv) CPI (1) Consumer price index v) Consumer confidence index c) Nominal variables i) Question: what do economic agents care about? (1) Relative prices ii) Measured on base period d) CPI i) Index of the price, through time, of a fixed market basket of goods purchased by a typical household in some base period ii) Includes (1) New goods (part of GDP)
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Unformatted text preview: (2) Used goods (3) Imports (4) Rent iii) Excludes (1) Stocks ECON202 Class Notes April 17, 2008 Lecture 8 (a) Form of savings (not considered investment in ECON) (i) Investment is always done by firms e) From price index to inflation rate i) Inflation rate (1) Measures how fast the price level is changing (a) Percentage change in the price level from one period to the next ii) Deflation (1) A decrease in the price level from one period to the next (a) No reason to loan money (i) FISHER EFFECT? f) How is CPI used i) Target policy ii) To index payments (social security) iii) Contract indexation iv)...
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ECON202 - Lecture 8 - (2) Used goods (3) Imports (4) Rent...

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